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ACCA – Non-taxable employee benefits and payments

by | Jun 19, 2023 | ACCA, business issues, business taxation, expense payments

We are sharing this update from ACCA, our professional body, for the interest of clients and contacts. The content is (c) ACCA

An employer can provide some benefits to employees on which the employee is not taxable – from advice on pensions to work-related training

Benefits on which the employee is not taxable are listed in chapter 5 of HMRC Booklet 480 ‘A tax guide – expenses and benefits’. This can be used as a checklist when reviewing benefits and P11D entries.

The non-taxable expenses include the following:

  1. annual parties or similar functions which cost no more than £150 per head
  2. carers’ board and lodging
  3. cost of purchasing assets from employees
  4. employee shareholders – the value of employee shareholder shares awarded, less the amount that the employee shareholder is treated as having paid for them, is treated as earnings of the employment. The employee shareholder is usually treated as having paid £2,000 for the shares and this deemed payment is usually only available once to an employee shareholder from the same employer or an associated company
  5. equipment provided to disabled employees are not taxable for the private use of equipment or services (eg wheelchair or hearing aid)
  6. fees paid by the employer for an application for employee to join the Protection of Vulnerable Groups monitoring schemes
  7. goodwill gifts – the provision of goodwill entertainment for an employee (or employee’s family or household) if no more than £250 and subject to various conditions
  8. health-screening and medical check-ups (up to one of each per year)
  9. job-related living accommodation in certain circumstances only
  10. late-night taxis provided by an employer to employee, subject to certain conditions
  11. long service and suggestion scheme awards, subject to certain conditions
  12. free or subsidised meals provided by employer to employee, subject to numerous conditions
  13. medical treatment abroad – the cost of necessary medical treatment abroad where an employee becomes ill or suffers injury while away from the UK in the performance of their duties (and insurance cost for such treatment)
  14. mobile phones – the provision of one mobile phone by an employer to an employee
  15. office accommodation, supplies or services used by the employee in performing their duties and any use of the benefit for private purposes by the employee is not significant
  16. the provision of a car, motorcycle or bicycle parking space at or near the employee’s place of work
  17. payments towards additional household costs incurred by employees who work at home up to £6 per week, £26 per month or £312 per year without supporting evidence of the cost. If more is paid then supportive evidence is required or HMRC’s agreement is required to pay higher amounts tax free
  18. expenses incurred in the provision of any pension, annuity, lump sum, gratuity or similar benefits to be given to the employee or to any member of the employee’s family or household on employee’s retirement or death. Pensions (and others) on retirement or death. The cost of providing such benefits may in some circumstances be taxable under ITEEPA 2003
  19. the provision of pensions advice to the employee up to £500. This should be available to all employees generally, or to those at a particular location (although it may be limited to those nearing retirement through age or ill health)
  20. reimbursements made to employees by the employer for items purchased by the employee on behalf of the employer. Such items should not appear on form P11D
  21. subject to numerous conditions, the removal expenses borne or removal benefits provided by the employer may be exempt from tax and NICs. The exemption is due to employees who change residence either due to starting a new job or for a transfer within an employer’s organisation. The first £8,000 may qualify for the exemption
  22. subject to numerous conditions, costs incurred by the employer in retraining the employee intended to help that employee get another job
  23. sports facilities provided by the employer to employees and members of their families and households
  24. subject to conditions, trivial benefits are exempt from tax and NICs if cost does not exceed £50 (£300 for directors/office holders) for employees
  25. the benefit of welfare counselling made available to all employees generally on similar terms is exempt from tax (excluding some specific counselling)
  26. the provision of work-related training made for the employee by the employer
  27. workplace nurseries, subject to various conditions
  28. some travel between home and work. The cost of travel which an employer provides to take an employee home if either:
  • the employee is occasionally needed to work late (9pm or later) but those occasions are not regular (for up to 60 journeys in the year)
  • the employee normally travels to and from work in a car shared with other employees
  • provision of a works bus
  • employer subsidises public transport
  • benefit of bicycles and/or cyclist’s safety
  • additional costs caused by strikes or other industrial actions (such as hotel accommodation near place of work or additional travel costs)
  • assistance with the cost of travelling between home and work for disabled persons
  • travelling facilities provided between the mainland and offshore oil or gas rigs or platforms. May also include overnight accommodation and subsistence.

Useful information

HMRC booklet 480

ACCA technical factsheet: Treatment of benefits in kind – P11D guidance